How does RedotPay Credit work?
RedotPay calculates a credit limit from supported crypto held in the account. Stablecoins are excluded from the collateral calculation described in RedotPay’s getting started guide. When Credit pays for a transaction, RedotPay locks a corresponding amount of eligible crypto as collateral.
RedotPay’s example says a 60 USD payment may lock crypto worth about 100 USD. The actual credit limit and required collateral depend on the supported asset, its price and the risk rules shown in the app.
How is RedotPay Credit interest calculated?
RedotPay says Credit uses simple daily interest on the principal that has been used. Interest is added to the balance owed, but the published explanation says interest does not compound on itself. The applicable rate must be checked in the app before borrowing.
Credit interest example
Example interest: 0.90 USD
This example uses the values entered above. It is not a quote. Use the rate and balance shown in your RedotPay app.
Should you use RedotPay Credit or a funded balance?
| Question | Funded card balance | RedotPay Credit |
|---|---|---|
| Are you borrowing? | No, the card spends available funds | Yes, the used credit balance must be repaid |
| Are assets locked? | Assets used for payment are deducted or converted | Eligible crypto is locked as collateral |
| Is there interest? | No credit interest, though card and conversion fees may apply | Daily simple interest applies to used principal |
| Main market risk | Asset value can change before spending | Collateral value can fall while the debt remains |
What can go wrong with crypto backed credit?
- Collateral can fall: a sharp price drop can worsen the credit risk indicator.
- Assets are unavailable: locked collateral cannot be withdrawn or traded until the corresponding balance is repaid.
- Interest continues: the used principal accrues daily interest until repayment.
- Rules can change: supported assets, limits and availability depend on the app and region.
- Failure to repay: RedotPay says missed repayment can lead to additional fees or account restrictions.
Who should consider RedotPay Credit?
RedotPay Credit may fit an eligible user who understands collateral, interest and repayment and wants short term liquidity without immediately selling supported crypto. A funded balance is simpler for a user who does not want debt, daily interest or collateral risk.
Borrowing against a volatile asset can amplify losses. Do not use RedotPay Credit solely because a limit appears in the app. Check the rate, collateral requirement, repayment plan and risk indicator first.